ISLAMABAD, Sept 23: The seven-member Saarc countries will sign the limited multilateral agreement on avoidance of double taxation (LMAADT) in the upcoming summit to be held in Dhaka in November.

Informed sources told Dawn on Friday that the draft treaty was finalized by the sub-group on avoidance of double taxation held in Katmandu recently

The sources said that the agreed text of the draft agreement would now be submitted to the higher Saarc bodies for consideration and signatures during the 13th Saarc Summit, which is scheduled to be held in November 2005 in Bangladesh.

According to these sources, the agreement would come into effect from July 1, 2006 after the notification issued by the Saarc secretariat regarding completion of all formalities, including ratification, wherever applicable, by all member states.

The sources said that the sub-committee had also proposed establishment of a group on cooperation in tax matters at an early date. If approved, the sources said the first meeting of the group would be convened in the first half of 2006.

This would help in facilitating the smooth implementation of the double taxation agreement and to further expand cooperation in the field of taxation among the Saarc member countries.

The LMAADT would apply to taxes on income imposed by or on behalf of the Saarc member states. They shall be regarded as taxes on income, all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid or deemed to be paid by enterprises. The agreement would also apply to any identical or substantially similar taxes that are imposed after the date of signing of the agreement in addition to, or in place of, the existing taxes.

Under the agreement, a professor, teacher or research scholar who is or was a resident of the member state immediately before visiting the other member state for the purpose of teaching or engaging in research, or both, at a university, college or other similar approved institution in that other member State shall be exempt from tax in that other member state on any remuneration for such teaching or research for a period not exceeding two years from the date of his/her arrival in that other member state.

The agreement would also help the member countries in exchange of information regarding their respective taxation treaty, assistance in collection of taxes, training of tax officials and sharing of tax policies.